Market Has Poor Reaction to Citi's Earnings

If everyone and their mother knew that Citi's earnings were going to be bad, and that they would take a huge writedown, then why is it hurting the market so much?

Citi (C) reported a larger EPS loss than expected, and took an $18.1 billion write-down on subprime and fixed income. They also had a $4.1 billion increase in credit costs due to estimated losses on consumer loans. Citi also cut its dividend by 40%, to save capital, and will sell $2 billion in securities to raise money.

The comments on their consumer loans is hurting retail stocks, as it increases the worry about the consumer. The 10-year yield is also reflecting more economic concerns, as it breaks to a new low at 3.71%. Again I ask you, where is the Fed?

Asian markets were down across the board overnight, on concerns about U.S. economic growth. And my public enemy #1, the Yen, is up more than 1.25% today. The FXY (Yen etf) is breaking to a new high. This trend needs to reverse for the U.S. markets to rally.

Also, oil is down below $92 this morning, and this is weighing on the energy stocks. As these stocks have been market leaders, their weakness weighs on the overall market. But financials are down the most so far.

Investor anxiety is high, with a put/call over 1.0 and an ARMS Index over 2.10. This should help at some point. The recent Market Vane survey showed bulls the lowest in 4 years. And the market is still above the lows from August.